Retail sales (offline and online) during the festive season increased by about 15% year-on-year in 2024, much lower than 32% or so in 2023 and 88% in 2022, Nomura Global Research wrote in a note on Tuesday citing rough estimates based on anecdotal data.
“Demand is holding up in rural areas and in tier-2/3 cities, but urban metros and industrial demand are weak,” it said, adding the overall results look mixed for consumption. Festive retail sales growth is slower for offline stores and higher for online e-commerce platforms, with the latter driven primarily by tier-2 and tier-3 cities.
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Economist Sonal Varma believes the Indian economy has entered a cyclical growth slowdown and coincident and leading growth indicators point to a further moderation in the gross domestic product growth. “We see rising downside risks to our GDP growth projections of 6.7% in FY25 and 6.8% in FY26, both of which are already below RBI projections (FY25: 7.2%; FY26: 7.1%),” Varma wrote.
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Hard data for October show stronger growth in two-wheeler sales, reflecting steady rural demand. “The recovering rural economy contributed to better two-wheeler and tractor sales, although the latter is picking up from a very low base,” the report observed.
On the other hand, passenger vehicle sales have been soft and driven by heavy discounting, while the continued contraction in sales of medium and heavy commercial vehicles points to weak industrial activity, the report pointed out. “Urban consumption indicators have been softening, and there is evidence that companies are scaling down their salary outlays,” it added.
Among the trends noticed this time is the increased reliance of customers on loans to finance their purchases. Amazon reported a 50% y-o-y increase in usage of its “Amazon Pay ICICI Bank credit card” in 2024, up from 25% growth in 2023. Also, demand for gold is lower in volume terms due to higher gold prices,
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